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US Shipments From Chile Dropping Amid Extreme Drought

Central Chile is suffering its worst drought in 60 years. This includes the capital of Santiago, home to nearly half the country's population of 18 million people, as well as the nearby region of Valparaiso. Experts predict climate change, over-exploitation by agriculture and other factors mean the shortage of water will be permanent. Not only is this changing the lives of farmers and ranchers, but it's also cutting into revenue from agricultural products sent on cargo ships from Chile to the U.S.

Santiago and surrounding areas are in the midst of what scientists have called a Mega Drought (MD) – an uninterrupted period of dry years since 2010. It encompasses a broad area with detrimental effects on water availability, vegetation and forest fires that have scaled into social and economical impacts.

Acuelo Lagoon was one of the main water sources for the afflicted areas, but it's dried up for the first time in modern history. Many farmers' wells are dried up, too, once able to irrigate crops twice a day. As a result, they've been going out of business and searching for new careers. Ranchers have had to sell their livestock and land because it's getting too expensive to truck in water. One such rancher summed up the situation to the Al Jazeera network in July of 2019 as "a disaster."

Chart A (Source: U.S. Customs and Border Protection)

A WorldCity analysis of the latest U.S. Census Bureau data shows Chile's trade with the U.S. rose to $13 billion through the first six months of 2019, but this is 4.13 percent below its total trade during the same time period in 2018. While, overall, Chile's exports increased 4.07 percent, exports of drought-stricken agricultural commodities have taken a different course.

Imports of grapes (fresh or dried) from Chile to the U.S. fell 14.6 percent, to $659.91 million, for the same year-over-year period; strawberries, blueberries and raspberries combined fell 11.72 percent to $262.91 million. Among the top five U.S. airports, seaports and border crossings that receive products from Chile, three of them – Port Everglades, Port of Panama City and Port of Philadelphia – had decreased volumes of imports.

According to U.S. Customs and Border Protection, the number of maritime shipments from the Port of Valparaiso to the U.S. from January through June has dropped by more than half year-over-year from 2018 to 2019 (chart A). This includes containerized and non-containerized cargo.

The drought is so bad that Chile's Minister of Agriculture, Antonio Walker, announced recently that the government had decided to declare an agricultural emergency in the Region of Valparaiso due to the water shortage.

Acuelo Lagoon, April 2014 (left) versus March 2019. (Source: NASA)

"We have signed the decree that officially declares this agricultural emergency due to water scarcity," Walker said. "The region is experiencing a very complicated situation. We have a 75 percent precipitation deficit… 50,000 animals have been affected by the drought…it is one of the country's most important exporting agricultural regions."

Walker also said, "We are not going to leave the farmers alone, we are going to support them to the extent of our resources. I think this is a very important action where we recognize that there is a water scarcity issue here; there is an agricultural emergency and we the Government must do something about it."

Walker said the agricultural emergency in the region will last until December 31 and added that he will visit the area.

Chart B (Source: U.S. Customs and Border Protection)

The key is to stop losing water that flows from nearby rivers directly into the Pacific before resorting to large-scale desalination of Chile's more than 2,500 miles of coastline. But, according to water expert Felipe Martin, this would require building dams and reservoirs, processes that could take 15 to 20 years to complete. He noted that it takes about four years to build a hospital, which would be beneficial in the short-term. But Chile isn't seeing illness levels that the country as a whole could suffer from the lack of investment in infrastructure. Martin said Chile is suffering from a "severe infrastructure deficit."

While the ongoing drought may not be entirely responsible for evaporating some of the business between the U.S. and Chile, it's likely playing a part. From March through June of 2018 and March through June of 2019, maritime imports from the Valparaiso region to the U.S. followed a pattern of decline. However, the overall number of shipments has been much lower in 2019 compared to 2018. Unfortunately, a recent report by scientists at the University of Chile gave little hope of recovery anytime soon. They point to indicators in climate change models, as well as El Niño and La Niña models, stating "…we anticipate only a partial recovery of central Chile precipitation in the decades to come."